Autoliv is the world’s largest safety system supplier in automotive industry. This global, Tier 1 manufacturer is headquartered in Stockholm and had revenues of over $8 billion last year. It supplies airbags, seatbelts, and steering wheels to most of the Automotive OEMs – companies like Renault/Nissan, Volkswagen, etc. targetP!, in turn, is a boutique procurement consultancy.
The main take aways from the presentation earlier this year were the following:
Autoliv’s Ongoing Journey in Supply Chain Risk Management
Mr. Niebur’s and Thiessen’s presentation was taped in November of 2021 and then played online in February. At the time we spoke, Mr. Niebur spoke of risk management as a continuous improvement journey that would never end. There were several things they were looking to accomplish in the near term. I wanted to circle back to Klaus and Jan and get caught up on their journey.
Steve: Klaus, when we talked, you mentioned Autoliv was already doing digital supplier management, had digital sourcing solutions, and was looking at real-time transportation visibility solutions to provide better predicted times of arrival for inbound and outbound shipments. In short, this risk management solution needed to integrate into your IT ecosystem. Your future vision was for risk management to be seamlessly integrated into an advanced control tower. Can you talk about how this journey is going?
Klaus: This is correct and it is still our goal to create this Control Tower. It will link all initiatives within the supply chain function and be enabled by our digital solutions and all data sources. And we are making progress.
Steve: Can you go into more detail on your vision for the control tower?
Klaus: The plan is to build a holistic “one-stop-shop” Control-Tower along all supply chain functions. This includes plant operations, inbound and outbound transportation, warehousing, demand planning and our comprehensive and running supply chain risk management ecosystem. As a first step, we’re operating a “lean” Control-Tower within our supplier relationship management system. This is our “supplier board”. This intermediate step is more related to Procurement and supply chain transparency. However, we are screening the market for technology. One thing we are looking for is a new way to create digital transparency upstream including visibility to risks from our N-Tier suppliers. This is not just important for our supply chain teams. It is also important for other stakeholders including our compliance, sustainability and even our customer management teams.
Steve: You mentioned your people were swamped and that they needed better tools to do their jobs. Can you give me a concrete example of how your risk management solution detected a threat and came to the rescue?
Klaus: I can´t give too many details for compliance reasons. But let´s imagine that a company wants to invest in a new plant, in a country that they have not previously operated in. In the beginning, this company would not know all the risks related to that plant. For example, to build that plant, the company would need to work with a construction company or companies. If we faced that situation, our risk analytics would include financial assessments of potential suppliers for this construction project. Unhealthy companies could jeopardize the ability to bring the plant live on schedule. Further, the analytics could identify construction firms that could adversely impact our reputation if we selected them.
Steve: You had engaged in extensive training but mentioned that more needed to be done. You also mentioned that the way your professionals were evaluated might need to change. Can you update me on this?
Klaus: We have invested a significant amount of time and money on internal training over the past few months. In addition, key players – such as our Divisional Risk Managers, as well as me – had an education program on risk management that lasted several months. I also ran several webinars and summits for our suppliers and our customers to help them understand how important we think our risk management program is.
Then of course, our own team needs constant training because our initiative is evolving over time. We need to make sure all the steps necessary to improve our resilience program is understood. We also want to make sure that the new features and functionality coming online will be efficiently used in daily life. Soon we will do more training. This will occur after we have finalize adjustments to our core procurement process. For example, improved resilience will require changes to the way we do supplier pre-qualification, sourcing, and our procurement segmentation strategy.
Steve: Jan, you have not said much. Any final thoughts?
Jan: I expect that 2023, and probably for years to come, life will be as challenging as it was in 2022.
Klaus: I agree. We will continue to invest in our supply chain risk management initiative to help minimize any negative impacts from unexpected risk events. We are strengthening our supply chain resilience wherever possible, and this also involves doing more work with our suppliers. We consider Digitalization as one of the key success factors in this journey. However, procurement will remain a people business; we know that there will be no success at all if we are not investing in education. That’s why we will constantly develop our people to become even more mature in the manner in which they deal with risk.
Jan: I believe the success of any modern supply chain risk management approach will be determined by how effectively we link humans and machines.
Steve: Thank you both for taking the time to discuss this.
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